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Morgan Stanley Downgrades Chipotle to ‘Equal Weight’

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Morgan Stanley’s downgrade

Today, Morgan Stanley downgraded Chipotle Mexican Grill (CMG) from “overweight” to “equal weight” as the surge in the company’s stock price drove its valuation multiple close to the bull case scenario, which the financial services company thinks may take two to three years to play out, reports CNBC.

However, the financial services company is optimistic about Chipotle’s fundamentals and has raised its price target to $658 from the earlier $617. The new price target represents a fall of 6.9% from its stock price of $706.48 as of April 16.

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Other analysts’ recommendations

Today, Bernstein and Wedbush have also raised their price targets. Bernstein has raised its price target from $650 to $820 while Wedbush has increased its price target to $680 from $640. Earlier this month, Piper Jaffray had increased its price target from $725 to $755, and Stifel had raised its price target from $500 to $700. However, on April 11, Jefferies downgraded the stock from “buy” to “hold.”

Of the total 31 analysts following Chipotle, 29.0% have given the stock a “buy” rating while 54.8% favor a “hold” and 16.1% have a “sell” rating. On average, analysts have given Chipotle a 12-month price target of $604.38, implying a fall of 14.5% from its stock price of $706.48 as of April 16.

Peer comparisons

With a total of 11 analysts covering Shake Shack (SHAK), 27.3% say “buy” while 63.6% have given the stock a “hold” rating and 9.1% say “sell.” Analysts’ 12-month price target for Shake Shack stands at $52.90, which represents a fall of 11.1% from its stock price of $59.49 as of April 16.

Of the total 29 analysts who cover McDonald’s (MCD), 79.3% say “buy” while 20.7% have a “hold” rating. Analysts have given McDonald’s a 12-month price target of $199.64, implying a potential upside of 4.1% from its stock price of $191.70.

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